MTN CEO explains why mobile data is so “infernally expensive”

MTN CEO Rob Shuter said entry-level and out-of-bundle data prices are high and need to be addressed.

This was in response to a question from Bruce Whitfield as to why mobile data in South Africa is so “infernally expensive”.

Shuter said data pricing is a complex science, and is not the same across all global markets.

He said while MTN’s bundled data prices compare favourably against global standards, entry-level and out-of-bundle prices are high.

Shuter said there are two problems with how data is priced:

  • Entry-level pricing for data for someone who did not buy a data bundle on the MTN network is high.
  • When a person goes out-of-bundle after depleting a data bundle, they are put on a high tariff.

He said there is a legitimate public concern regarding high entry-level and out-of-bundle data prices.

These prices are not commercially sensible for the industry, as their aim is for customers to use data, to increase data services, and to build the online industry.

Expiring data

Commenting on the issue of expiring data, Shuter said it is the way the industry has evolved over the years.

It started with voice-minutes which were bundled, and has moved to mobile data bundles – which were sold in the same fashion.

In-bundle rates for voice minutes or megabytes of data are cheaper than standard rates, because you “buy in bulk”.

However, the lower bulk-pricing carries the disadvantage of expiring if you do not use it within a cerain time frame.

“This is how the industry has evolved – you can either pay per MB or minute, or you can buy a bundle, and what is not used often does not roll over,” said Shuter.

“Some people find it a practice which is not appealing, but it has also emerged over time because there was a demand for these bundled products.”

MTN’s strategy

Shuter said MTN has 230 million subscribers globally, of which around 70 million are data subscribers.

The challenge for MTN is to get the rest of its subscribers onto data services, which will require a different commercial approach.

“These new data customers are going to be in rural areas, and they are going to buy smaller amounts of data,” said Shuter.

He said the data pricing methodology across MTN needs work and attention, which is why the company has embraced a “dual data strategy”.

The strategy involves rolling out high-speed data networks and services to high-end consumers in urban areas first, and then bringing these services to rural areas.

“We really need a good strategy – coverage, commercial models, and handsets – to bring the next 100 million customers into the data world.”

Now read: Mobile data will not just expire and must roll over – ICASA

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MTN CEO explains why mobile data is so “infernally expensive”